The Railroad Industry Local Operations And Future Challenges

January 23, September 14-16, 2008 Tomorrow Challenges On The Horizon For The Railroad Industry

January 23, September 14-16, 2008 Tomorrow Railroad Challenges  RSSM  Demographics Of Assets  Deregulation – Regulation  PTC  Business Levels

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Rail Sensitive – Security Material Chain of Custody Over 350 STCC Numbers Face To Face COC Requirements Repository For COC Documentation Designated Secure Interchange Locations Security Checklists For Alert Levels AAR Database For Rail Carriers AAR, FRA, TSA, ASLRRA Interface

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Resource Demographics Median Age47 Retirements – K

September 14-16, 2008 Tomorrow Railroad Challenges “Working On The Railroad” Age on Birthday Total In 2006NumberPercent Under to 2932, to 3957, to 4963, to 5996, to 6916, and older Median Age = 47 Total RR Employees 268,055 Less Than 10 Years118,67544% More Than 25 Years 91,38934%

September 14-16, 2008 Tomorrow Railroad Challenges North American Freight Car Fleet By Car Type Car Fleet Demographics

September 14-16, 2008 Tomorrow Railroad Challenges North American Freight Car Fleet Average Age In Years Car Fleet Demographics

September 14-16, 2008 Tomorrow Railroad Challenges New Builds: The Winners Car Fleet Demographics

September 14-16, 2008 Tomorrow Railroad Challenges New Builds: The Losers Car Fleet Demographics

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Deregulation/Regulation October 18, 1980 A rail carrier could establish any rate for rail service unless the ICC (STB) were to determine that there was no effective competition for rail services. Rail shippers and rail carriers would be allow to establish contacts not subject to ICC review. Carriers ability to restructure redundant and light density lines. Carriers could raise capital and increase market share.

Performance of Class I Railroads Railroad Challenges

January 23,

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Positive Train Control (PTC) What is Positive Train Control? Positive Train Control (PTC) systems are integrated command, control, communications, and information systems for controlling train movements with safety, security, precision, and efficiency. PTC systems will improve railroad safety by significantly reducing the probability of collisions between trains, casualties to roadway workers and damage to their equipment, and over speed accidents.

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Positive Train Control (PTC) What is Positive Train Control? Prevent train collisions and over speed accidents by requiring automatic control systems to override mistakes made by human operators.

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Positive Train Control (PTC) The President has signed the “Rail Safety Improvement Act of 2008” requiring certain freight and passenger railroads, by 2015, to implement PTC on their main lines (defined as 5 MGT traffic annually).

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Positive Train Control (PTC) Current Concerns December 2015 Mandate No Single Source Technology No Industry Standard Amtrak – Commuter - Shortline Routes Clear Defined Definition – Routes Workforce Education and Training

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Positive Train Control (PTC) HELP Coming From: FRA, ASLRRA, Class 1’s In Concert TTCI (Transportation Technology Center, Inc – 50 Miles Of Test Track) AAR Define Track/Car Standards AAR Facilitates PTC Standards HELP WANTED!

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Business Levels Ethanol Production HR 2950, Renewable Fuels Requires 36B by Production about 8B Gal 190 Ethanol Production Plants Operating 18 New Ethanol Plants Under Construction Transportation – Rail 75%; Truck; 20%; Barge 5% 46% of U.S. Gasoline is an Ethanol Blend

January 23, September 14-16, 2008 Tomorrow Railroad Challenges Business Levels Marketing Trends Grain/DDG’s Coal Chemicals Steel - Products Forest Products Automotive Economics Foreign Trade Global U. S. $$$ Wait And See The Hill

BargeTruck Railroad Comparison of Fuel Efficiency Using Ton-Miles Per Gallon of Fuel Fuel Cost – Poses a Challenge, but Creates a Bigger Opportunity

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Major US Ports

Market Share Barriers International Markets